This past Saturday at the Missouri History Museum, one of hip-hop’s leading marketing executives broke down artists and their relationships to record labels in numbers that don’t add up to the quick bling-bling and cha-ching glorified in videos, magazines and glamorous parties.
“Once you sign, you are already in debt to the record company,” Leota Blacknor told attendees at the Missouri Historical Society’s “Economics of Hip-Hop” program, part of its “Race, Power and Money Series.”
Blacknor is director of urban marketing at Virgin Records and former general manager of the highly successful Ruff Ryder Records. She worked as Sean “P. Diddy” Combs’ executive assistant before becoming senior director of administration at his Bad Boy Entertainment label, where she acted as liaison with Arista Records.
Blacknor was thoroughly informative. She used a projector to outline key record label departments, sub-departments and functions. They included A&R (Artist and Recruitment), Marketing, Promotions and Legality.
To demonstrate how money is spent on artists and the way each department functions on their behalf, she picked audience members to play various roles.
Michael Welch, a 19-year-old local rapper/producer, role-played as a rapper. Blacknor gave him a hypothetical but typical $400,000 recording contract.
Out of $400,000, Welch would receive a $50,000 advance n half at the commencement of the deal and the remainder upon the album’s completion. Blacknor said record companies don’t typically award artists an entire advance, fearing they may take the money and run.
The $50,000 advance would be deducted from the original $400,000 recording fund, leaving Michael and his A&R (played by another audience member named Harold) with $350,000 to make a hit album.
Though the $350,000 is earmarked to get the album made, Michael would still owe the label $400,000, which includes his advance.
Blacknor stressed that the up-front recording fund is always recoupable and that artists don’t make any money on CD sales until the label recoups their money.
“Michael, pay attention, because this is sometimes how artists become broke,” Blacknor explained, incorporating the scenario of choosing a producer to be featured on the album.
Welch chose hot, Grammy-winning artist/producer Kanye West. Blacknor estimated that West would cost at least $100,000. By the time she factored in first-class roundtrip airfares, a four-star hotel stay, limousine, incidentals, meals (for him, his bodyguard and assistant) and studio time, Welch would have spent one-quarter of his money on one record.
“So, you can see right now, Michael is already in trouble,” Blacknor said. “What that means is that we now have to reforecast the monies that we’ve earmarked for Michael’s project, because we realize Harold can’t turn a rap album around for $350,000.”
Blacknor said that even an extra $200,000 would still only put Michael in the hole. Then there’s the video, photo shoots for publicity, stylists, vinyl for club deejays, advertising in national publications, a website n the list goes on.
But Blacknor said if allocated money is properly spent and the A&R has a good relationship with producers and video directors, an artist can soon make money with a couple of hit records.
“Once we got hit records, you get a chance to make money on tour n that becomes your vehicle to make money,” Blacknor said, adding, “hopefully, while on tour you’re doing wise things with your money and not buying a lot of bling-bling, Bentleys, and you’re still living in a one-bedroom tenement.”
While on tour, she said, artists make even more money by selling t-shirts, baseball caps and other memorabilia.
“The dumbest thing you can do as an artist is give a record company control over your merchandise,” Blacknor said. “If you have a manager, they should fight for that.”
Blacknor pointed to the hip-hop artists who find even more external vehicles of making money, like clothing lines and beverage companies.
“From a rap perspective, I understand that the same 19-year-old that listens to rap also buys clothes and is culturally immersed in other lifestyle marketing components,” she said. “If you are an astute executive, you don’t separate the two.”
In a question-and-answer session following her speech, local hip-hop purist and impresario Terrance Strong asked if the music industry is designed to keep artists in debt.
Blacknor responded: “Don’t spend all your money on cars and chicks. Invest it. It’s temporary success for you build on. So develop your own intellectual property. Remember, some of these rappers never had a bank account or credit and are going to the check-cashing place to cash a $50,000 check.”
After his role-playing and Blacknor’s rundown of the recording industry, aspiring rapper Welch said it isn’t as sweet as it looks on TV.
“That helped me a lot,” said Welch, who is a member of the local rap group Misjudged. “It isn’t just you n there’s a lot of people that you have to take care of and that have to take care of you.”
Welch said before hearing Blacknor, he was in rush, “Now, I’m not,” he said. “I’m trying to finish massage school, just in case it doesn’t work, instead of being so anxious.”
